Hope Bancorp, Inc. · NASDAQ:HOPE
Hope Bancorp — 2022 Keefe, Bruyette & Woods Winter Financial Services Symposium
30 slides from Hope Bancorp's conference presentation, Feb 17, 2022
Slide 1: 2022 Keefe, Bruyette & Woods Winter Financial Services Symposium
2022 Keefe, Bruyette & Woods Winter Financial Services Symposium February 17-18, 2022
Slide 2: Forward Looking Statements & Additional Disclosures
Forward Looking Statements & Additional Disclosures This presentation contains statements regarding future events or the future financial performance of the Company that constitute forward- looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21
Slide 3: Presentation Index
Presentation Index Company Overview Slide 4 Financial Highlights & Earnings Performance Slide 8 Loan Trends Slide 15 Asset Quality Trends Slide 21 Deposit Trends Slide 23 Strong Franchise Value Slide 25 Appendix Slide 29
Slide 4: Company Overview
Company Overview
Slide 5: Company Profile Today
3rd largest Asian American bank in the U.S.1 6th largest bank head quartered in Los Angeles1 97th largest financial institution in the U.S.2 22nd largest SBA lender in the country by volume3 Only Korean American bank with presence in Korea Only Korean American bank (formerly known as BBCN Bank) ever
Slide 6: National Geographic Presence
National Geographic Presence Nationwide footprint with meaningful presence, providing full banking services to the largest Asian American communities in the U.S. Southern California 27 Branches, 1 Residential Mortgage LPO Northern California 2 Branches, 1 SBA LPO, 1 Commercial Lending LPO Seattle 3
Slide 7: Corporate Social Responsibility Highlights
Corporate Social Responsibility Highlights 1 OUT OF 2 Bank of Hope branches located in low-to-moderate income areas 459 HOURS 459 hours of CRA-reportable volunteer hours in 2021 (previously averaged 1,000 hours/year) $3.99 BILLION loans funded in 2021 $663 MILLION CRA-reportable small business lendi
Slide 8: Financial Highlights & Earnings Performance
Financial Highlights & Earnings Performance
Slide 9: Earnings & Profitability
Earnings & Profitability • Net interest income before provision for credit losses increased 2% to $133.3 million • Efficiency ratio improved 288bps Q-o-Q to 50.70%; noninterest expense to average assets improved 3bps to 1.67% • PPNR1 increased 10% Q-o-Q to $72.2 million • Net interest margin expande
Slide 10: Net Interest Income and Margin
Net Interest Income and Margin 10 • Net interest income increased 2% Q-o-Q and 10% Y-o-Y reflecting higher interest income on loans and investment securities and lower interest expense on deposits Net Interest Income & NIM ($ Millions) $120.8 $122.6 $126.6 $130.3 $133.3 3.02% 3.06% 3.11% 3.07% 3.13%
Slide 11: Interest Rate Risk
Interest Rate Risk 50% 68% 33% 36% 48% 50% 32% 67% 64% 52% 3.27% 3.44% 1 3.37% 1 3.36% 3.38% 4Q20 1Q21 2Q21 3Q21 4Q21 Fixed Variable Avg Rate 1 Average rate on new loans including SBA PPP was 2.56% for 1Q21 and 3.32% for 2Q21 (Excluding PPP loans) Variable 41% @3.23%2 Fixed 32% @3.60%2,3 Hybrid 1 27
Slide 12: Noninterest Income
Noninterest Income 12 • Noninterest income increased 23% Q-o-Q to $13.1 million in 4Q21 vs. $10.6 million in 3Q21 • All components of primary customer-related service fees* increased Q-o-Q • Sold $41.0 million of the guaranteed portion of SBA 7(a) loans to the secondary market in 4Q21 vs. $31.3 mill
Slide 13: Noninterest Expense and Efficiency
• Noninterest expense decreased to $74.2 million from $75.5 million in 3Q21 • 4Q21 salaries and benefits reflects more normalized bonus reserves, stock compensation expense and increased deferred loan origination costs Efficiency Ratio & Noninterest Expense to Average Assets 4 53.77% 53.61% 53.12% 5
Slide 14: Managed through Uncertainties and Delivered Significant Achievements in 2021
New loan production accelerated throughout 2021 and positions Company to return to historically strong growth rates Continued to enhance the mix of deposits which contributed to decreasing deposit costs throughout 2021 Strong core performance with pre-provision net revenue1 increasing 11% over 2020
Slide 15: Loan Trends
Loan Trends
Slide 16: Loan Production & Portfolio Trends
Loan Production & Portfolio Trends New Loan Originations Funded ($ Millions) 1 Represents average rate on new loans excluding PPP loans. Including PPP loans, the average rate on new loan originations was 2.56% for 1Q21 and 3.32% for 2Q21 $340 $311 $520 $590 $623 $305 $20 $439 $160 $301 $344 $539 $65
Slide 17: Loan Portfolio – Period-End vs. Average Balance
Loan Portfolio – Period-End vs. Average Balance $13.56 $13.70 $13.42 $13.42 $13.95 $13.04 $13.35 $13.29 $13.29 $13.45 4Q20 1Q21 2Q21 3Q21 4Q21 Period-End Average Balance $1,008.2 $956.2 $725.2 $663.8 $530.3 $754.4 $756.9 $635.7 $569.5 $497.0 4Q20 1Q21 2Q21 3Q21 4Q21 Period-End Average Balance Total
Slide 18: Loan Portfolio by Region
Loan Portfolio by Region 18 1986, Southern California Founded by Los Angeles-based Korean American investors 1997, Northern California Expanded de novo into Northern California; Acquired Asiana Bank in 2003 1998, Eastern Region Expanded into New York/New Jersey through multiple acquisitions 2004, Mi
Slide 19: Loan Portfolio Composition
Loan Portfolio Composition $13.95 Billion (as of 12/31/2021) 22% CRE: Owner-occupied 43% CRE: Nonowner-occupied 30% C&I 5% Consumer CRE Portfolio Outstanding $9,105.9MM Average Size $1,735M Average Yield 3.91% C&I Portfolio Outstanding $4,208.7MM Average Size $814M Average Yield 2.92% Consumer Portf
Slide 20: Portfolio Diversification
Portfolio Diversification Retail - Multi 20% Hotel & Motel 14% Industrial & Warehouse 14%Gas Station & Car Wash 12% Mixed Use 9% Multifamily 8% Retail - Single 8% All Others (CRE) 15% Wholesale Trade 15% Manufacturing 13% Warehouse Line 13% Information 9% Restaurant 7%Gasoline Stations 4% Healthcare
Slide 21: Asset Quality Trends
Asset Quality Trends
Slide 22: Asset Quality
Asset Quality Nonperforming Assets ($ Millions) Total Criticized Loans ($ Millions) Provision (Credit) for Credit Losses & Net Charge Off (Recoveries) ($ Millions) 22 $123.2 $152.0 $167.1 $98.5 $109.2 $20.1 $18.5 $16.6 $15.2 $2.6 0.84% 0.99% 1.05% 0.64% 0.62% 4Q20 1Q21 2Q21 3Q21 4Q21 NPLs OREO NPAs/
Slide 23: Deposit Trends
Deposit Trends
Slide 24: Deposit Trends
Deposit Trends 24 Deposit Composition ($ Billions) Deposit Cost Trend Average Interest-Bearing Deposits & Cost of Deposits ($ Billions) • Total cost of deposits decreased 3bps Q-o-Q • Average noninterest bearing demand deposits increased 2% Q-o-Q contributing to deposit cost decline 0.51% 0.48%0.44%
Slide 25: Strong Franchise Value
Strong Franchise Value
Slide 26: The Representative Bank of the Korean American Community
Bank of Hope 47% Bank of Hope Hanmi Bank Metro City Bank Pacific City Bank Commonwealth Bus. Bank Open Bank First IC Bank US Metro Bank PromiseOneBank NewBank New Millennium Bank UniBank Noah Bank Bank of Hope 48% Bank of Hope 47% The Representative Bank of the Korean American Community Total Assets
Slide 27: Strong Capital Position & Returns
12.42% 9.98% 11.01% 11.70% 12.42% 10.11% 11.03% 11.70% Total Risk-Based Capital Ratio Tier 1 Leverage Ratio Tier 1 Common Equity Ratio Tier 1 Capital Ratio 9/30/2021 12/31/2021 $17.3 $17.3 $17.3 $17.3 $16.8 $47.2 $2.8 4Q20 1Q21 2Q21 3Q21 4Q21 Dividends Buybacks Strong Capital Position & Returns Capi
Slide 28: Near-Term Outlook
Near-Term Outlook 28 Loan Growth: Re-energized focus on business development expected to lead to high single-digit to low double-digit loan growth for 2022, excluding PPP Noninterest Expenses: Noninterest expense to average assets expected to be in the range of 1.65% to 1.70% Net Interest Marg
Slide 29: Appendix
Appendix
Slide 30: Appendix: Non-GAAP Financials
Appendix: Non-GAAP Financials Management reviews select non-GAAP financial measures in evaluating the Company’s financial performance and in response to market participant interest. A reconciliation of the GAAP to non-GAAP financial measures utilized by management is provided below. Pre-provision Ne
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